Question

Which one of the following statements is
**TRUE**?

Group of answer choices

When the required return is less than the internal rate of return, net present value is positive.

When the IRR is greater than the required return, the net present value is negative.

If projects are mutually exclusive, you should always select the project with the greatest IRR.

Projects with conventional cash flows have multiple internal rates of return.

Answer #1

The NPV will be positive if required rate of return is less than IRR, this statement is true

The NPV will not be negative if IRR is higher than required return, this statement is false

If projects are mutually exclusive then NPV is considered for selection,If one project NPV is higher but IRR is lower than other than choose this project, so this statement is not true that always select the project with higher IRR

The conventional cash flow has only one IRR whereas unconventional cash flow has multiple IRR, this statement is also false

Which of the following statements is correct:
A. projects with unconventional cash flows have multiple
internal rates of return
B. if 2 projects are mutually exclusive, you should select the
project with the shortest payback period
C. If the IRR exceeds the required return, the profitability
index will be less than 1.0
D. the Profitability index will be greater than 1.0 when the net
present value is negative
E. when the internal rate of return is greater than the required...

Which of the following statements is true?
Group of answer choices
The payback investment rule is based on the notion that an
opportunity that pays back its initial investments quickly is not a
good idea
An internal rate of return (IRR) can’t be a negative number for
an investment opportunity.
Net present value (NPV) always is less reliable than IRR for an
investment opportunity.
In general, there can be as many internal rates of return (IRRs)
as the number of...

Which one of the following is False when it
comes to IRR?
Multiple Choice
It can be intuitively appealing because it presents its results
as a percentage rather than a dollar amount
It is not as reliable as NPV when looking at mutually exclusive
projects
It will always yield more than 1 result when NPV is negative
It will always agree with NPV for projects where all cash flows
beyond Year 0 are positive as long as the project is...

Cross over rate can be calculated…
Group of answer choices
from the total cash flows of two mutually exclusive projects
for only projects having positive NPVs
for any project that has IRR lower than required rate
for mutually exclusive projects with conflicting ranking in NPV
and IRR

Which of the following statements is
correct?
Group of answer choices
Both the regular and the modified IRR (MIRR) methods have wide
appeal to professors, but most business executives prefer the NPV
method to either of the IRR methods.
The phenomenon called "multiple internal rates of return" arises
when two or more independent projects that have different lives are
compared to one another.
The IRR method is based on the assumption that projects' cash
flows are reinvested at the project's...

11.
The discount rate that makes the net present value of an
investment exactly equal to zero is the:
A)
Payback period.
B)
Internal rate of return.
C)
Average accounting return.
D)
Profitability index.
E)
Discounted payback period.
12.
The internal rate of return (IRR) rule can be best stated
as:
A)
An investment is acceptable if its IRR is exactly equal to its
net present value (NPV).
B)
An investment is acceptable if its IRR is exactly equal to...

Question text
Which of the following statements is INCORRECT?
Select one:
a. When choosing between mutually exclusive projects, managers
should accept all projects with IRRs greater than the weighted
average cost of capital.
b. For independent projects, the decision to accept or reject
will always be the same using either the MIRR method or the NPV
method.
c. One of the disadvantages of choosing between mutually
exclusive projects on the basis of discounted payback method is
that you might choose...

Which one of the following statements about inflation is
correct?
A.
The real rate of return accurately indicates how an investment
opportunity will change the investor's purchasing power.
B.
The greater the inflation rate is, the stronger the purchasing
power of a currency becomes.
C.
Deflation is highly desired because it immediately stimulates
consumption in an economy.
D.
When the expected inflation increases, the nominal interest
rates decline.
Which of the following statements about capital budgeting tools
are correct?
I....

Which of the following statements is
not correct?
Group of answer choices
The binomial option pricing model when taken to the limit
becomes the Black-Scholes option pricing model.
The Black-Scholes model uses a continuous time discount
factor.
The binomial option pricing model use a ratio of the range
values as the hedge ratio.
The Black-Scholes model is related to a heat transfer equation
and Brownian molecular motion.
The Black Scholes model only estimates the intrinsic value of
the call option....

The internal rate of return method of analysis
a. May produce multiple rates of return when cash flows are
conventional
b. May lead to incorrect decisions when comparing mutely
exclusive projects
c Is rarely used in the business world today
d Is the preferred method of analysis when projects are either
mutually exclusive or have unconventional cash flows
e Is dependent upon prespecified rates used to discount the cash
flows

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